Indemnity Insurance of Manorial Rights Lender conveyancing obligations
Barnsley BS and Godiva Mortgages, as with most mortgage companies, set their own requirements when it comes to manorial rights indemnity insurance. This page is designed to help domestic conveyancing firms on the various lender solicitors panel where the title for the the property to be mortgaged incorporates manorial rights. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Skipton, Lloyds TSB or Santander. The content on this page is not focused on manorial rights indemnity insurance requirements.
Need help with manorial rights indemnity insurance from your lender?
Leeds Building Society and RBS like most banks, instructions are such that where manorial rights indemnity insurance is to be taken out:
- your practice is required to disclose to the insurer all relevant information which you have obtained
- your firm are responsible for approving the terms of the manorial rights policy on behalf of the mortgage company
- you must supply a copy of the manorial rights indemnity insurance to the borrower and explain to the borrower why the manorial rights indemnity insurance policy was effected and that a further policy could be mandatory if there is supplemental lending against the security of the property
- the limit of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- the manorial rights indemnity insurance policy must be in favor of the mortgage company and, if possible, for the benefit of the borrower and any subsequent owner or mortgagee. Where the borrower will not be protected by the manorial rights indemnity insurance policy, you must advise the mortgagor of this fact.
- your firm must explain to the borrower that the borrower must adhere to any conditions of the manorial rights indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in respect of the policy
- the manorial rights indemnity insurance policy should not incorporate terms that you are aware would void or compromise the interests of the mortgage company
- the manorial rights indemnity insurance policy should be placed on risk at no cost to the bank
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Barclays plc | Higher of purchase price or valuation |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Harpenden Building Society | 110% of mortgage advance |
| Intelligent Finance | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Magellan Homeloans | At least equal to the value of the property |
| Molo Finance Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgages. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| Secure Trust Bank | An amount at least equal to the market value. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Whistletree | The value of the property |
Manorial Rights Contingency Insurance : Reflections
The extent of the terms for manorial rights indemnity insurance are explained in the policy document. Property lawyers are obliged to point your non-lender client to the manorial rights indemnity insurance policy itself. Manorial Rights Contingency insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to determine that it is correct. The lifetime of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Manorial Rights Contingency insurance: Important characteristics and benefits:
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Manorial Rights indemnity insurance Cover normally includes- The out of pocket expenses of altering or destroying all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the manorial rights insurance.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the manorial rights indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Diminution in value due to the successful enforcement of the risks specified in the manorial rights indemnity insurance.
- Cover for compensation incurred in any proceedings in respect of the risks specified in the manorial rights policy, including fees of a legal nature.
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can rest assured that the insurer will check the details on any proposal form very carefully prior to any claim being met.
Supplemental considerations for manorial rights indemnity insurance
Manorial Rights Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that manorial rights indemnity cover will not necessarily be the answer. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the lender approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most manorial rights Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above is in relation to properties in England and Wales.